Document Type

Capstone Project

Publication Date



Microfinance, Commercialization, Mozambique, Africa, Outreach, Depth of Outreach, Poverty, Master's International, Stevenson Center


In today’s microfinance, scholars and policy-makers across the world have emphasized the importance of financial sustainability, or the ability of a microfinance institution (MFI) to finance its operations. In order to reach financial sustainability, MFIs embrace commercialization, a process where an MFI undergoes restructuring in order to open up avenues to capital. Yet, scholars are concerned that this emphasizes on financial sustainability will cause the social good objective to suffer, a phenomenon known as “trade-off.” Indeed, studies have found that commercialization impacts MFI outreach in various ways. To my knowledge, no research has attempted to understand the impacts of commercialization on microfinance outreach in Mozambique. Therefore, interviews of 24 experts in the microfinance field in Mozambique were conducted and a survey was used to gather quantitative data. A descriptive analysis and cross-tabulation analysis were used to examine the survey data. The research supports previous findings that when an MFI undergoes commercialization it moves up-market loaning to less poor clients indicated by an increase in minimum capital requirements. This demonstrates that commercialization has a negative impact on depth of outreach. This study also supports the claims that commercialization increases the number of clients reached by MFIs, increases the diversity of products available to MFI clients, and decreases the cost to clients demonstrating that commercialization has a positive impact on breadth, scope, and quality of outreach respectively. This study suggests that the trade-off phenomenon takes place when social good is measured as depth of outreach. However, when social good considers all dimensions of outreach, a negative trade-off is not significant. For future research, this suggests that to understand the impact of commercialization, financial sustainability should be balanced against all dimensions of outreach. For policy-makers and MFIs in Mozambique, these findings suggest that commercialization can be used as a tool to increase breadth, scope, and quality of outreach but cautions against commercialization if the social mission of the MFI is predominately depth of outreach.